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The interest rate and/or payment on non-prime HELOCs is often a deal-killer, so we’ll focus here on the RM + 2nd.

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HomeEquity Bank generally frowns on second mortgages behind its loans, but some borrowers add one anyway.

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If we crunch the numbers on the RM + 2nd, you’re looking at a 6.69 per cent three-year CHIP for the first $349,500, plus a 12 per cent interest-only private second on the remaining $120,500.

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On top of that, there’s an upfront lender/broker fee (typically around 2.5 per cent) on the second, plus one per cent to three per cent in renewal fees every one to five years. 

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The RM + 2nd’s monthly outlay looks gentler at $1,205 (you’re only paying interest on the second mortgage), but the unpaid CHIP interest stacks up like unopened mail.

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A decade in, the RM + 2nd borrower owes about $795,000, roughly $83,000 more than the Advantage borrower.

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Even with lower monthly payments, the lender fees and compounding interest mean the RM + 2nd route could still cost $70,000 more over a decade.

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Plus, there’s the recurring migraine of hunting down new private lenders and paying fresh legal, appraisal and closing fees every one to five years.

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A key motive for this product

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The household saving rate was 3.7 per cent in the second quarter, down from 5.3 per cent in early 2025 and roughly half the 7.4 per cent historical average since 1961, according to Trading Economics. 

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Only a third of Canadians contributed to an RRSP for the 2025 tax year, per Narrative Research, and a BMO poll found two-thirds agree it’ll be harder to save for retirement than it was for their parents. 

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So, when the nest egg comes up short, the nest itself has to pick up the tab.

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Of course, ideally, people would stash more cash for retirement, but Canada’s oppressive cost of living and tax regime turn that into an uphill sprint.

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Advantage can help bridge those shortfalls, while addressing a key drawback of reverse mortgages: too little upfront cash to pay off other debts and still have some left over. 

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Good HELOCs still rule

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If you can pass the government stress test and qualify for a sufficient prime HELOC, take it and don’t look back. 

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With enough borrowing room, you can even cover the monthly interest from the HELOC itself to help with cash flow. But talk to a mortgage broker and choose the right lender, as some banks are more tolerant of people making endless interest-only payments than others.

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By the way, mention that to a personal finance guru and they may shriek at the thought of paying debt with debt, but that’s basically how a reverse mortgage works anyway. 

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At least when you capitalize HELOC interest payments, you have a chance at saving more money because the rate is much lower.

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The other HELOC trick is, you have to be careful to leave yourself enough borrowing room to pay the interest for a long time.

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And you do go the line of credit route, try to keep it small enough so you can pay it off with a reverse mortgage later, if needed. A financial planner or mortgage professional can model the maximum HELOC amount you should stay under to make that work.

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For homeowners who can’t solve their problems with a conventional mortgage or HELOC, Advantage offers a pragmatic, if pricey, middle ground: you sacrifice more of your estate tomorrow in exchange for a bigger cheque today — plus easier approval, and a firm retirement date for your monthly payments.

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For the best national insured and uninsured mortgage rates, updated daily, please visit our mortgage rate page here.

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